Naples to examine city employees' compensation to fix budget shortfall

The city of Naples will take a hard look at employee compensation packages in an attempt to narrow an estimated $16 million deficit over five years.

Naples City Council on Tuesday asked city officials to conduct a salary survey to see how city employees salaries and compensation packages compare to their counterparts in both the private and public sector.

Compensation packages account for about 70 percent of the general fund.

"When City Council realized, belatedly, that our city employees were being underpaid, we rapidly increased their salary, benefits and pensions to market conditions. That was the right action to take for our employees, but we failed to stop those increases when they far surpassed comparable private sector jobs," said Councilman Gary Price.

"The right action to take now is to bring the city salaries, benefits and pensions comparable to the private sector."

The city is projecting a more than $2.5 million operating fund shortfall in fiscal 2012, according to the sustainability report. That shortfall jumps to more than $3.1 million in fiscal 2013 and more than $3.7 million in fiscal 2014.

The projected deficit will narrow in fiscal 2015 and 2016 – to $3.5 million and $3.2 million respectively – when property values are expected to recover.

"Every year I've prepared a budget, we've always had gaps with everyone asking for everything," said Finance Director Ann Marie Ricardi. "But we pull it together in the end."

Pulling it together could mean substantial cuts in each department, and changes to employee compensation packages.

The sustainability report takes several assumptions, including compensation increases, into account.

Ricardi in her report projected the city would see a 2 percent increase in wages in the coming years. Those increases would come from contract obligations, increases in pension and insurance costs and eliminating furlough days.

Those increases were negotiated two years ago in union contract talks, and aren't necessarily wage increases. Instead the changes would restore benefits – holiday pay for members of one union and smaller employee contributions to the pension for another – not give employees pay raises.

Both those contracts have clauses that allow either party to renegotiate because of the economy, and in a Jan. 3 memo to City Council City Manager Bill Moss suggested the city renegotiate those contracts.

Moss in that memo also said that if "a decision to balance the budget had to be made at this time" the city should also keep the one-week furlough in place, eliminate summer camps and after-school programs, and reduce the city attorney's budget.

Moss also suggested deferring the hiring of four firefighters for one year, and that the city once again reducing staffing levels by five to seven people.

But Moss warned council members that none of the options laid out in his Jan. 3 memo should be looked on as recommendations at this point in time.

That isn't stopping council from taking some of them to heart, though. Council members on Tuesday asked that they discuss programs, like summer camps, offered through the community services department during a workshop in February.

Eliminating duplicate programs – like summer camps and after school programs – have been on the table before, and the city estimates it will save $200,000.

Moss also said the city could use $1 million from the tax stabilization fund, a surplus reserves fund, to help balance the budget in fiscal 2012. But council members said they were leery about dipping into the reserves, and at least one council member said she was not opposed to looking at increasing the tax rate to the roll back rate if it means not using tax stabilization funds.

"I'm not opposed, and I know I will be jumped all over, at looking at rollback rate or 50 percent of rollback rate, so we don't keep going to (the tax stabilization fund)," Councilwoman Dee Sulick said.

"We have to be realistic in terms of … what it's costing to run the city. We're not just talking about cutting out the fat, we're talking about cutting out the meat."

Council will continue discussions on how to balance the 2012 budget throughout the year.